Multinational taxi firm Uber has lost its latest bid to clarify the legal status of its drivers, as the Court of Appeal critcised its ‘complex and artificial’ driver contracts.

In a judgment handed down yesterday in Uber v Aslam, Farrar & Ors, the court said drivers should be entitled to rights including holiday pay, minimum wage and entitlement to breaks.

It is Uber’s third legal defeat on the issue in three years following decisions from the employment tribunal (ET) and employment appeal tribunal. The case will now be appealed in the Supreme Court.

Uber was challenged by two drivers, Yaseen Aslam and James Farrar, who argued they should be entitled to worker’s rights.

However, the three judges were split. Lord Justice Underhill found in favour of Uber while master of the rolls Sir Terence Etherton and Lord Justice Bean found in favour of the drivers.

In the judgment, Etherton LJ and Bean LJ said drivers operated under ‘complex and artificial contractual arrangements’.

These contracts, according to the judgment, were ‘no doubt formulated by a battery of lawyers, unilaterally drawn up and dictated by Uber to tens of thousands of drivers and passengers, not one of whom is in a position to correct or otherwise resist the contractual language’. It added: ‘We see no reason to disagree with the factual conclusions of the ET as to the working relationship between Uber and the drivers, but we consider that the ET was plainly correct.’

In his separate finding, Underhill wrote: ‘It still seems to me that the relationship argued for by Uber is neither unrealistic nor artificial. On the contrary, it is in accordance with a well-recognised model for relationships in the private hire car business.’

Rachel Mathieson, solicitor at Bates Wells Braithwaite, which represented the drivers, said the decision is an important step to protecting those operating in the ‘gig economy’.

The judgment follows similar cases involving drivers at taxi company Addison Lee and plumbing organisation Pimlico Plumbers.

Despite this latest clarification on the law, the court said it would be up to the government to clarify how it will adapt modern employment protections to the ’gig economy’.

‘The Taylor Review (Good Work – The Taylor Review of Modern Working Practices) was published last year. It recommended the introduction of a new “dependent contractor” status.’ A number of questions are asked relating to those issues. These are quintessential policy issues of a kind that parliament is inherently better placed to assess than the courts,’ the judgment said.

An Uber spokesperson said: ’This decision was not unanimous and does not reflect the reasons why the vast majority of drivers choose to use the Uber app. Almost all taxi and private hire drivers have been self-employed for decades, long before our app existed.

’Drivers who use the Uber app make more than the London Living Wage and want to keep the freedom to choose if, when and where they drive. If drivers were classified as workers they would inevitably lose some of the freedom and flexibility that comes with being their own boss.’